Movie Stars’ Declining Real Wages

Barney Frank cracks wise about the idea that a fee on banks to cover the costs of failed firm resolution will cause an exodous of talent:

He also played down concerns that talent would leave the industry.

“I don’t know where people would go for comparable salaries,” [Rep Barney] Frank said. “I guess perhaps they could star in major motion pictures.”

This brings to mind the little-known fact that real wages for movie stars are actually in sharp decline. Take this look at nominal prices in 1999 and 2009 and you’ll see that almost everything has gone up. A box of Cheerios cost $3.89 in 1999 and $5.15 in 2009. An average cell phone bill was $40.24 in 1999 and $49.57 in 2009. That’s life. Often these prices are declining in CPI-adjusted terms, and in the case of cell phones you’re also seeing a major uptick in quality. But one thing that hasn’t gotten more expensive in the past ten years — even in nominal terms — is hiring Tom Cruise to star in your movie. That’s still $20 million. And nominal giant movie star salaries had already been stagnating at around $20 million for some years before 1999.

What’s more, the LA Times reports that now movie star salaries are declining even in nominal terms:

So today, the actors who used to make $15 million are making $10 million. The filmmakers who used to make $10 million are making $6 million. The writers who used to get a three-step deal, guaranteeing payments on a series of rewrites, now get one. As one prominent agent put it: “In terms of prices and quotes, everyone is in free fall. It’s just brutal out there. The balance of power has totally shifted from our side to their side.”

During this same period, Hollywood has also actually started making fewer films, so the situation facing movie stars is even bleaker than that. Basically a whole series of technological developments have served as negative shocks to the film industry, so while “movie star” is still a very good job to have in the scheme of things, it’s really not what it was back in 1990.


The severe recession is likely to lead to declining real wages for star athletes (in the NBA & NHL the operation of the salary cap will force this to happen, but market pressure should make the same thing happen in MLB and NFL) but we can expect that to reverse when the economy recovers. The outlook for Hollywood is much worse.